Analysis and criticism of America's most prominent public intellectual and champion of Keynesian economics. I am part of the Austrian School of Economics, and I critique Krugman's writings from that perspective.

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Thursday, October 21, 2010

Should Paul Krugman and Robert Murphy Debate?

Perhaps the best Paul Krugman critic on the web today is Robert Murphy, who has managed to break down a number of Krugman's arguments and point out the Princeton Prof's errors. Obviously, it is time for these two men to debate!

23 comments:

Bob Roddis
said...

Krugman will NEVER debate. Despite Rand Paul’s failings as a war-hawk, he seems firm in his anti-Fed views. Have you ever heard a word of this in the MSM? You never will. Yes, they are afraid, very afraid.

Last December, Krugman referred to Austrians as “banana fungus” and “The New Larouchies” when challenged to debate.

I've been an Austrian since 1973 and I knew the bust was coming and I knew why.

I'm not going to debate when or if Peter Schiff said anything. It's not relevant whatsoever to the ABCT vs Keynes debate. Keynesianism was the cause of the bubble and bust and Keynes has lost the debate.

I've been an Austrian since 1973 and I knew the bust was coming and I knew why.

Yeah, just like Marxists *knew* the end of capitalism was coming and how Marxists are always *predicting* the end of capitalism, or how Marxists Paul Sweezy and Paul Baran *predicted* the 2008 crisis:

http://socialistworker.org/2009/04/13/marxism-and-the-financial-crash

Austrians and Marxists have been predicting crises in every year for decades - and are mostly always wrong.

Keynesianism was the cause of the bubble and bust and Keynes has lost the debate.

You clearly don't have the foggiest idea what Keynesianism is.A neo-liberal system of dysfunctional financial regulation, asset price bubble economics, and excessive private debt has nothing to do with traditional Keynesianism.

The blame for the 1990s tech bubble and housing bubble lies with the ex-Rand acolyte Greenspan and other New Classicals/neoliberals

And regarding ABCT, the Hayek/Garrison ABCT crew couldn't even convince Schumpeter, Lachmann, or Kirzner that it was serious universal theory of business cycles. Israel Kirzner on Mises.org:

KIRZNER: I’ve never felt that the Hayekian business cycle theory was essentially Austrian. In fact, Mises, who was the originator of this whole idea in 1912, didn’t see it as particularly Austrian either. There are passages where he notes that people call it the Austrian theory, but he says it’s not really Austrian. It goes back to the Currency School and Knut Wicksell. It’s certainly not historically Austrian. Further, I would claim that, as developed by Hayek, there are many aspects of it that are non-Austrian. I don’t believe that to be an Austrian you have to buy into the Hayekian view of business cycles …. I think the way Hayek developed it was not quite consistent with the way Mises laid it out in 1912

http://mises.org/journals/aen/aen17_1_1.asp

Mario Rizzo:

“The first thing to keep in mind is that while [ABCT] … embodies “Austrian” characteristics it is not an official Austrian theory. What do I mean by that? Eminent Austrian economists have made important criticisms of the bare-bones theory. For example, Israel Kirzner has criticized the theory for not taking entrepreneurship seriously. Where are the alert entrepreneurs either in the boom phase or the recession phase? There are profits to be made from avoiding mistakes. Another eminent Austrian economist, Ludwig M. Lachmann — one of the main contributors of the development of the idea of capital heterogeneity which is an important constituent part of the cycle theory — criticized the ABCT for assuming that agents simply expand their investment whenever interest rates fall.

"If you cant even convince your fellow cultists, you got no chance of convincing serious economists."

Wow... The irony of that statement coming from a post-keynesian... I had to have my buddy punch me after I read that in order to stop my laughter. I mean, seriously, I was starting to have trouble breathing.

Yet again, the pathetic conspiracy theorist tries to base his argument on irrelevancies and other things that don't bear up to even minor scrutiny. I mean, is it any wonder that they have trouble even debating new keynesians? I mean, it's like they consistently challenge Stephen Hawking to a basketball match and consistently lose.

@Lordkeynes: Who said it was an evasion? Just an observation. I'm not the one you're arguing with. You even share the same kind of paranoia and propensity for quote-mining seen in radical creationists.

In his desperation*, “Lord Keynes” is showing his complete unfamiliarity with basic Austrian concepts. Everyone knows there were differences between Hayek and Mises. That a more technical and detailed analysis of entrepreneurship allegedly had to await Kirzner’s work does not refute the basic insight of the Austrian School. Artificially increasing the amount of loanable funds (which are in fact loaned out) in excess of real savings is going to distort the price structure and thus the capital structure because people will not know what anything is worth. This is going to impact more complex and longer term investments more than simpler and shorter term investments or products . I don’t see how that is even debatable, being self evident in the extreme. Keynesians, chartalists and inflationists of whatever variety will never focus on that core insight and will fuss and whine about everything else under the sun.

BTW, I have yet to see a criticism of Bob Murphy's three-pronged chart which is simply more evidence of the obvious. Money dilution screws up complex, longer term projects more than simpler, shorter term projects. DOH.

I agree. Interest rates must be artificially lowered, funny money must be created out of thin air, and people must be duped. If people weren't duped (and dupes), they would immediately rise up and execute the inflationists.

It's a chicken/egg thing. A smart populace wouldn't have a funny money-creating central bank. A populace of the weak-minded will fall for inflationist tricks because they are too dull to see the surreptitious wealth transfers which are the raison d’etre of Keynesianism.

The impairment of economic calculation must invariably occur. To whom, how much, regarding what, where and why always will depend on the specific circumstances.

@LordKeynes: Interesting how, when you find yourself losing against someone like Bob Roddis, you'll immediately latch onto anyone you perceive as having a weaker argument. How ironic that you then follow up with an argument based upon an irrelevant ad hominem fallacy. But then again, if you understood basic logic, you would probably drop the post-keynesian bullshit.

If I thought that debating you seriously would yield any results, I would do so. However, I have little patience for someone who will misconstrue his opponent's argument in order to more easily knock down his made up straw-man to claim a false victory. Any argument with you would only result in frustration, as you would repeat the same debunked talking points over and over again.

You're like a crazy homeless person. I'm throwing bottle caps at you to provoke a reaction and laugh at your insanity.

@ Lord Keynes: If the Austrian school was a "cult", you would think there would be no differences of opinion within the school. Are Dean Baker and Paul Krugman just alike in their policy recommendations?

If you want to do some more quote mining, here's a good place to start:

http://blog.mises.org/10153/krugman-did-cause-the-housing-bubble/

Krugman advocates for the Fed to cause a housing bubble, denies he advocated for a housing bubble, and then denies the Fed caused the bubble.

@LordKeynes: Yes, your rambling has provided plenty of laughter for those of us without your unique delusions. Have you recovered from the beating you received in your second-to-last blog entry in the comments section? And how curious that this was when you could control what comments could be posted. Who knows what other criticisms you let slip through the cracks for nefarious reasons?

If someone wants to voluntarily deposit money in a fractional reserve "free-banking" institution with full disclosure of what was going on, go for it. Why a normal person would accept bank notes from such an institution is beyond me since it would invariably suffer from bank runs and when you show up to claim your gold, it might just all be gone.

My point (which you always ignore) is that the creation of fiat money is outright GRADE A 100% theft of someone else's purchasing power. And we've endured months of Chartalist yapping explaining how Austrian concerns about morality are passe and simply do not matter in our marvelous world of the future.

A physical debate places too much importance on characteristics of the debators. I would rather see the debate continue in places like this site and on the Mises site. This thread shows that what people see depends alot on what they already believe. I don't think putting lots of eggs in a single debate basket makes sense.

About Me

I teach economics at Frostburg State University in Frostburg, Maryland. We are located on the Allegheny Plateau, and we have cool summers and tough winters.
I am the single father of five children, four of them adopted from overseas and I have two grandchildren. My family and I are members of Faith Presbyterian Church (PCA).